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Wednesday, February 1, 2006

High Times, High Hurdles

John Croft

With activity up in major sectors like offshore energy, EMS and law enforcement, manufacturers and operators are enjoying good times and ready to tackle safety and security challenges facing the industry.

Matthew Zuccaro, the newly minted president of the Helicopter Assn. International, can't think of anything negative to say about the state of the industry going into this year's Heli-Expo. "There's a positive outlook in all areas," he said.

Zuccaro's assessment is buoyed by the very public display of how helicopters provided unique relief services during the many disasters of the past year. "The general consensus was that it was one of the finest hours for the industry," he said. "It was almost a classic example to point out that helicopters do save lives. From a public-relations standpoint, the average person truly saw the value of the machine."

As such, he said, HAI will recognize efforts of helicopter operators in response to the various disasters internationally, including Hurricane Katrina, the December 2004 Indian Ocean tsunami and the recent earthquake in Pakistan.

What will also surely be recognized at the conference is an industry in the midst of its "finest hour" in terms of growth. "This is the first time in the industry where all cycles are up," said Russ Spray, CEO of Turbomeca USA, of activity in oil, emergency medical services (EMS), law enforcement and other sectors of the business.

The upside--acknowledgement of the humanitarian potential and the upbeat economic activity and outlook--will be counterbalanced by new and not so new issues--safety and security and the challenges of supporting all of that growth, to name a few.

Zuccaro, who succeeded Roy Resavage as HAI president Nov. 1, said the association is working with the industry and government on a number of issues coming into this year's show, including ways to improve disaster-response plans in the wake of the ad hoc disaster relief efforts last year. Rather than a call for more helicopters, Zuccaro said the focus of meetings, starting this quarter, would be to do a better job using the resources that already exist.

Another key issue for the organization is addressing an emerging shortage of experienced pilot and aviation mechanics in the industry. "I think we're seeing the edge of it," he said. "We're seeing a longer time to fill positions for pilots and mechanics." Along with industry growth, the problems are being exacerbated by the retirement of Vietnam-era pilots and mechanics, and the ongoing war in Iraq and Afghanistan. Zuccaro said HAI has laid the foundation for boosting the ranks, in part through sponsoring career days and mentoring sessions at universities.

To tackle the ever-present community noise concerns, Zuccaro said HAI at the show would distribute a new noise abatement training DVD that illustrates "real world" issues of why Fly Neighborly programs are crucial to maintaining or increasing heliport and helicopter routes.

One manufacturer that will be more aggressively shopping its low-noise wares this year will be MD Helicopters, invigorated by a cash infusion from New York investment firm, Patriarch Partners, LLC, and a new management team. "The change has been absolutely remarkable," said David Oglesbee, the company's vice president, North American sales.

Oglesbee said MD will be bringing three helicopters to the show, something that "hasn't been done for a long time", including the MD-902 Explorer that's a competitor in the U.S. Army's 322-aircraft Light Utility Helicopter program, which is slated to select a winner in April.

MD will be highlighting a "new attitude" within the company, which is primarily for the benefit of the customer, according to Robert W. Ren�, interim CEO of MD. He said product support, not the product itself, has been the issue at MD in the past. "We're humbled that demand still exists," he said, noting that the company is "fortunately backed up" in terms of orders for the next several years.

A renewed focus on product support will also be the platform for Honeywell at the show. The company in August began reorganizing its customer service framework by creating a helicopter division. Whereas before, an operator would have to interface with different groups at the company, depending on the product, the new organization will feature one interface for each customer, according to Doug Kult, sales director for Honeywell Light Utility/Attack Helicopters. Kult said Honeywell hoped to have the new process operational by Heli-Expo, where the company will be showing its T5317BCV turboshaft engine for the Bell 210, among other products.

Engine manufacturer Turbomeca will have a three-pronged focus at Heli-Expo: the "Americanization" of its product; increased power and extended time-before-overhaul.

Turbomeca USA's Spray said the assembly line in Grand Prairie, Texas, is doubling in output capacity, from 650 to 1,300 Arriel 2 and Arrius 2 engines a year under a three-year program that started last year. Along with plant expansion and an increase in employees from 180 to 340, the company will also be increasing the U.S. content in those engines to 65 percent by 2007, and ultimately to 100 percent.

Spray said the "Americanization" is a "strong feature" for the Army's Light Utility Helicopter competition and the U.S. Coast Guard's HH-65 engine replacement program, which began in 2004. Turbomeca is partnered with Eurocopter and others on the UH145 contender for the Light Utility Helicopter.

Engine announcements at the show will likely included certification of the more powerful Arriel 2S2 for the Sikorsky S-76C++ and an increased TBO for the Arriel 2, up to 3,500 hr. from 3,000, an increase Spray says will save operators about 17 percent in engine costs.

Challenges going forward, said Spray, include sourcing and prices for raw materials for engines, particularly for the titanium and nickel used in axial compressors and power turbine wheels. Spray said titanium, which must be ordered at an undesignated price two years in advance, increased 60 percent in cost this year and that he had "no visibility" into how that price would change in 2007. "Eventually, this becomes a major determinant" to the price of the helicopter, he said, adding that Turbomeca and other companies are attempting to compensate for the effect by implementing lean manufacturing processes and more robotics.

Spray cautioned that with the "unprecedented growth" in the industry, customer service and product quality must take on a new urgency. "If you don't get hold of those very quickly, growth can seriously affect support and quality. He said Turbomeca is investing in continuous quality improvement and customer support programs, and has added staff and revamped how it supports customers in the U.S. and Europe. "We've intensified our quality department to prepare to grow. In our case, we've had a 230 percent increase in product demand in the past 36 months," he said.

Bell Helicopter is seeing a similar upswing. Bob Fitzpatrick, senior vice president of marketing and sales for the company, said the growth rate--28 percent in 2005 alone--is the highest he's seen in more than two decades, in part due to Bell's win for the Armed Reconnaissance Helicopter program and the V-22 Osprey going into production. Fitzpatrick said Bell will be introducing at least one new product at the show--a derivative of the Bell 407X--and possibly a second. Other aircraft present will be the Bell 429, the newly certificated Bell 210, the Armed Reconnaissance Helicopter and the Bell/Agusta BA609 tilt-rotor.

The company in November announced it was selling its 25-percent stake in the AB139 medium twin helicopter to AgustaWestland and granting AgustaWestland 100 percent ownership in all aspects of the program. Fitzpatrick said the business case for a medium twin helicopter did not support two companies as owners. The realignment also allows AgustaWestland to increase its share in the BA609 tilt-rotor from 25 percent to as much as 40 percent.

Heli-Expo will also be a platform for Bell to discuss safety features and introduce new safety products and upgrades, said Fitzpatrick. New or recent safety offerings planned include a Bell 412 health and usage monitoring systems (HUMS) and Chelton 3D flight display avionics for the Bell 407. Independent of the show, Fitzpatrick said the company was standing ready to help EMS operators meet potential safety upgrades it feels the FAA may mandate in the sector, primarily requirements for stricter weather minimums and night-vision goggle systems.

Sikorsky, too, will be focusing heavily on safety this year through its International Helicopter Safety Team participation. Sikorsky President Steve Finger pointed out that the company decided "to move the accident trend in the right direction" by installing as standard equipment enhanced ground proximity warning systems (EGPWS) in all of its new S-76 and S-92 helicopters in 2004. At the founding meeting of the team in Montreal last September, he announced a program to assist operators in retrofitting the equipment on existing helicopters, and said Sikorsky supported mandatory safety features like HUMS, which is standard equipment on the S-92, along with tail-strike warning systems, mandatory training and mandatory data-gathering systems, or flight deck recorders, for the cockpit.

The company comes to Heli-Expo with new subsidiaries--Keystone Helicopters and Composite Technologies, Inc. Sikorsky in December completed its acquisition of the privately held Keystone, the West Chester, Pa.-based completion and technical support center specializing in commercial helicopters, including S-76 completions, and air medical flight operations.

For its part, Eurocopter told Rotor & Wing it would be displaying a range of aircraft at the show, including some that had not been shown here before, some product upgrades, but no new products.

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